You're pretty much out of luck. This just happened to me and Sony's repair service is terrible. I would suggest going to a 3rd party. Sony charges $180 to repair your system where as some other places charge around $150. If your original system is returned to you then you can save all of the data on your hdd. When Sony sent me mine back they just sent me a refurbished model that didn't even work so I'm waiting for another model. Sorry I'm a bit of a downer. But good luck.
@nxh: That's saved on the PSN account itself so that should be fine. My PS3 is on the verge of dying... So much so that I'm wary to boot it up for any reason. Probably next month I'll just replace it with a slim and put this one out to pasture (or tear it apart and try and fix it myself).
@nxh: Any trophies that have been synced to the PSN will be safe. Game save files unfortunately will not be as they'll replace your system mobo which means you'll need to reformat your hard drive when you get the PS3 back.
If you haven't backed up your save files (which i really recommend doing in the future) you can try to heatgun your PS3 to reflow the solder on the board. A lot of the time the YLOD is caused by dry solder joints which is why this fix works for a lot of people. It's only temporary though and will probably YLOD again within the month but it gives you enough time to get your save files. You will void your warranty doing this however but it may just be worth it.
@Lava: as far as I know, you can pay to have Sony replace it, you can seek 3rd party replacement, you can get one of those PS3 repair books which detail how to troublehshoot and fix PS3s, or you can try to sell it on eBay and pickup a new one.
Mine has been doing the same upon booting up, but I can trick it into starting if I take the disk out right when I hit power. This is obviously a temporary workaround. I've considered geting it repaired but I have one of the earlier models with only 40GB drive. I could spend the ~@200 to fix it or spend $100 more and just get a slim with the larget HD. It was used when I got it and its lasted me a good 3 years so I guess I shouldn't be to bummed.
Anyone know if the slims are more reliable? I'd have a real warranty if I got a new one but i'm wondering about the long run.
@Lava: You could try to repair it yourself..... using the guide from gilksy http://www.yellowlight.co.uk/documents/YLODfix.pdf usualy there is atleast one dude in the area who will do these repairs for about $50 as its only an hours labour (if you do it regularily)
@gunslinger: yeah, the thing is I didnt back up any of my game data as I never thought this would ever happen to me =/ I've just taken it to a 3rd party today who specilize in repairing all types of consoles and apperently they said my HDD should be fine. So, I guess the only thing I can do now is just hope and pray it will be okay. :s